Can a BOM substructure analysis help your company reduce the costs of one-off designs? Yes, it can. In fact, not only can it help reduce the costs of new designs, but it can also reduce inventory skews across your entire product portfolio. The analysis focuses on finding the most common sub-components within your company’s current bill of materials. Changes are made to existing product lines and these standard sub-components are then used in new designs, further reducing costs. In the end, you’re able to reduce your inventory skews, reduce design costs and still meet your customer’s overall envelope and unique requirements. So, how is this analysis performed?
5 Simple Steps to the Substructure Analysis
First, the substructure analysis focuses on finding the most common sub-components within existing assemblies.
Second, these common sub-components are then tested across existing product lines in order to ensure that they meet the product’s existing fit, form and function requirements.
Third, the company then changes the bill of materials list for each and every existing product offering.
Fourth, the volumes on these sub-components are amalgamated in order to reduce the company’s costs on raw materials, as well as finished and semi-finished goods.
Finally, the company uses these standard parts within all future designs, allowing it to reduce its design costs and increase its profit margins.
- Find the most common sub-components, raw materials and semi-finished parts.
- Test these sub-components across multiple production work cells.
- Change BOM only after testing is finalized.
- Amalgamate volumes to reduce inventory skews.
- Use these same sub-component parts on all future designs.
The Three F’s of Performing the Sub-Assembly Analysis
Fit: Does standardization change the fit or envelop of the product? Does it force other adjustments in other portions of the finished assembly? If not, then proceed with changing the product's bill of materials.
Form: Does standardization add unnecessary time in production in terms of assembly, testing, inspection, and or shipping time? Do the changes increase cycle times at individual production work cells? If not, proceed with the change. ** if the changes do increase cycle times in one cell, then assess the impact of the changes on the product’s overall cycle time (look for a total savings in cycle time for the end product)**
Function: Does standardization change the product’s operating window, its parameters in terms of performance, or does it have any impact on how end-users interact with the product? If not, proceed with changing the product's bill of materials.
The above is taken from Bill of Materials Essentials: Substructure & Sub-Assembly Analysis
Performing the substructure analysis can sometimes be a time-consuming endeavor. Most of these changes involve calculating individual cycle times and accounting for any changes in assembly times at individual work stations. The purpose is to ensure that these changes can be done without impacting current assembly speeds, and most importantly, that they don’t increase product costs, or the product’s overall cycle time.
How Does the Substructure Analysis Reduce Design Costs?
A number of my customers assume that a custom-designed product involves complete customization – all the way down to the largest sub-components of the overall assembly. Granted, they still do their best to use standard material when they can, but they don’t build their design around using their most common parts. Instead, they design first and then see what fits. Don’t do this! Establish your standard sub-components first and then incorporate your designs around these standard parts.
- Define your list of common sub-components
- At the beginning of each new design, ask what sub-components can be used while maintaining the customer’s overall envelope on design.
- Always ask yourself “what standard parts can be used while still maintaining the feel of a custom-made part?”
By no means am I implying that your company should do away with customization. Nor am I stating that sub-components should supersede any functionality on providing the customer a custom-made part. If you have to give a customer an entirely new design - from beginning to end - then go ahead and do it; just make sure you charge for it. However, if you are looking to reduce your costs on one-off designs, then take the time to see which standard sub-components, raw materials and semi-finished parts can be used at the design stage. Finally, make sure your NRE: non-recurring engineering charges cover the costs of a custom design.
To read more about charging customers NRE, please read: Charging Customers NRE, Non-Recurring Engineering Charge
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